WASHINGTON—The nation’s postal unions back a bipartisan postal reform bill produced, after talks with them, mailers, the Postal Service management and others, by leaders of the normally ideologically polarized House committee that writes USPS legislation.
If the measure, HR756, survives the legislative gauntlet on both sides of Capitol Hill and Republican President Donald Trump signs it, it could bring to an end years of congressional wrangling over the fate of the Postal Service and its “deficits.”
Solving the Postal Service’s problems is important not just for the 500,000-plus members of the Letter Carriers (NALC), the Postal Workers (APWU), the Mail Handlers and the Rural Letter Carriers, but for everyone in the U.S. That’s because the Postal Service provides the only door-to-door delivery service, six days a week, to every address nationwide.
As a result, even private firms such as United Parcel Service depend on USPS for “last mile” deliveries. And billions of dollars of the nation’s business – everything from bills to tax refunds to medicine deliveries – go through the postal system.
But USPS has run a “deficit” for the last decade, principally caused by a GOP-mandated $5.5 billion yearly prepayment of future retirees’ health care premiums, imposed after 2006.
Without that prepayment, the USPS, which does not receive taxpayer subsidies, would have shown a $3.7 billion profit since the start of fiscal 2014, NALC President Fredric Rolando said. That included “an impressive” $522 million operating profit during the first quarter of this fiscal year. That profit would have been $1.1 billion more if USPS hadn’t missed a deadline, forcing first-class stamp prices to drop for the first time since 1919, he added on Feb. 9.
Postmaster General Megan Brennan, Rolando and other witnesses at the House Government Reform Committee on Jan. 7 said HR756 would solve future prepayment problems by automatically enrolling USPS retirees in Medicare.
Speaking for all the unions and their workers, Rolando told lawmakers that since 2006, the USPS has cut costs by cutting 200,000 workers, even as the U.S. added about a million addresses a year. “We’ve successfully managed to preserve our networks and to maintain our capacity to serve the nation,” he said. It’s also closed post offices and mail sorting centers.
“Although we will continue to adapt and evolve to meet the changing needs of America’s businesses and households in the years ahead, only Congress can address our biggest financial challenge: The unique and unsustainable burden to massively prefund future retiree health benefit premiums decades in advance,” he elaborated.
“No other enterprise in the country faces such a burden…The expense of this mandate has accounted for nearly 90 percent of the Postal Service’s reported financial losses since 2007. Without a change in the law, that mandate will cost nearly $6 billion in FY 2017 alone.”
The pre-funding mandate is so bad, Rolando reminded lawmakers, that the Postal Service exhausted its line of credit, can’t replace its 24-year-old fleet of vehicles and slowed first-class mail. Despite all that, it made operating profits, he noted. But “when we diminish services we risk unnecessarily driving mail volume out of our system,” Rolando warned.
The other big funding problem, Rolando said, is that the postal service’s retirement and health benefits fund must invest its income solely in low-interest federal securities, not a mix of government bonds and private stock and bond index funds that would give it higher returns. In essence, the fund is subsidizing the rest of the federal government by several billion dollars a year, Rolando said. The fund now has a $52 billion trust, he noted.
An accompanying measure, HR760, by Rep. Stephen Lynch, D-Mass., a former local Ironworkers president and son of an Ironworker and a postal worker, solves that investment problem. It should be folded into the main bipartisan legislation, said Rolando.
“By adopting HR760, Congress could: Raise the long-term rate of return on the retiree health fund’s assets, reduce the burden of pre-funding, offset the cost of postal Medicare integration, relieve upward pressure on postage rates and reduce the misguided impulse to slash service,” he pointed out.
Though Rolando backed both bipartisan bills, they lack a feature of past postal legislation the unions championed: Letting USPS compete in other lines of business.
Those would have post offices become postal banks for underserved areas, provide notary public services, and transport beer and wine, among other services.
In statements posted on their websites, leaders of other postal unions backed HR756. APWU President Mark Dimondstein called the measure “a necessary step to solving the disastrous pre-funding mandate that is dragging down the Postal Service.
“We are encouraged by the bipartisan effort to fix the financial problems currently facing the USPS while preserving good union jobs and public postal services,” he added.
Mail Handlers President David Hogrogian said his union, a Laborers sector, “will review and analyze this bi-partisan legislation.” But “if this bill is passed by the new Congress and signed into law by President Trump, the Postal Service’s financial future will be more secure.”
One influential lawmaker, Rep. Mark Meadows, R-N.C., chair of the ultra-right House Freedom Caucus, told his committee colleagues that “I’m willing to invest political capital and we have a number of stakeholders who are here, as we are, looking to truly save the Postal Service as we know it.” The 40-plus member caucus pushes cutting all domestic spending.
Rolando promised the panel that postal unions would work with lawmakers and their partners “to adopt this legislation as quickly as possible.” He added that by passing HR756, ”We can also show how it is possible to make our democracy work for the common good at a time of great partisan polarization.”